Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Monday, 3 November 2014

Gold and silver hit 4 year lows

Quite a finish to October for the gold price, ditching more than $80/oz in only a matter of days.

Stock markets have been absolutely flying again this week.

In Japan the Nikkei 225 Index soared 4.8 percent higher as the BoJ announced surprise stimulus measures, a huge rebound during October now taking valuations to their highest point in 7 years.

Meanwhile in the US the Dow Jones has come roaring back close to a record high at 17,390.52, leaving a few market-calling pundits with egg all over their faces.

There has been the usual conjecture as to where gold goes to next with the price now down by 38 percent from its 2011 peak.

But instead of joining the guesswork - and by definition, most of it must be guesswork, since commentators and analysts have so often been wrong! - I thought I'd have some fun by charting some long run gold and silver prices.

Here's gold, which has recorded a compounding return of more than 5 percent per annum since 1991.

And here is the long run silver chart, which has recorded stronger growth of more than 6 percent over the same timeline.

As you can see from the long run charts, the prices of precious metals tend to be correlated to some extent.

Interestingly the ratio of the gold price to the silver price has now jumped to above 73 times ($1170/$16  = 73.1) a level we haven't seen in well over half a decade.

So this might either imply that the gold correction has further to run or that silver is now undervalued.

Over the short term what happens to the gold price is anybody's guess (and no doubt, anyone will guess) but over time it seems doubtful that the price will fall too much lower given that prices at US$1170/oz have fallen back considerably closer towards industry all-in sustaining costs.